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Parts Manager - Lift Truck Company East Rand

Parts production plan expected to boost local car makers

30 May 2016

South Africa's plan to increase local vehicle parts manufacturing will help local car makers increase production by an average of 2.4% a year for the next four years, ratings agency Fitch's Singapore-based subsidiary BMI Research said in a report on Friday.

Parts production plan expected to boost local car makers

©Andrey Armyagov via 123RF

SA's drive to increase local vehicle parts production included the KwaZulu-Natal government's purchase of 1,000ha of farmland in May to develop a R11.5bn automotive supply park south of Durban in 2018. As part of this project, it will target suppliers, including ones already working with vehicle manufacturers in the country, to set up there.

"We forecast vehicle production growth of 1.9% in 2016, with annual average growth of 2.4% over our forecast period 2016-2020. Driving this growth will be a supportive automotive development policy and a weak rand that will continue to drive investment into the local autos industry and bolster car exports over our forecast period," BMI said.

"SA's plan to increase investment in local parts production will result in cost and efficiency gains for (car makers) in the country.

"It will also create opportunities for new and existing automotive suppliers as vehicle production expands over our forecast period of 2016-2020.

"The strengthening of automotive supply chains in the country will support our positive outlook for vehicle production in SA over the next five years as (car makers) benefit from the cost and efficiency gains as a result of the increased localisation of parts production.

"It will also create new opportunities for foreign original equipment manufacturers and local producers to establish new partnerships," the researchers said.

Source: BDpro

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